AN ENTERPRISE MAP OF ETHIOPIA - London School of …

1 ETHIOPIA 2010/11/15 14:33 pagei #1 AN ENTERPRISE MAP OF ETHIOPIA ETHIOPIA 2010/11/15 14:33 page ii #2 ETHIOPIA 2010/11/15 14:33 page iii #3 AN ENTERPRISE MAP OFETHIOPIAJohn Sutton and Nebil Kellow ETHIOPIA 2010/11/15 14:33 page iv #4 Copyright 2010 International Growth CentrePublished by the International Growth CentrePublished in association with the London Publishing Rights ReservedISBN 978-1-907994-00-5 (pbk.)A catalogue record for this book isavailable from the British LibraryThis book has been composed in Utopia using TEXCopy-edited and typeset by T&T Productions Ltd, LondonCover design: LSE Design UnitCover photograph courtesy of theEngineering Capacity Building Program (ecbp) ETHIOPIA 2010/11/15 14:33 pagev #5 CONTENTSA bout the AuthorsixAcknowledgementsxiAcronyms and Abbreviationsxiii1 Introduction12 Widely Diversified Profiles of Firms16 Ahadu, DH GEDA, East African MIDROC Ethiopia22 MIDROC Technology Group, ELICO, Pharmacure,National Mining Corporation PLC, Agri-Ceft Ethiopia3 Sector Profiles of Major Firms39 Moplaco, Great Abyssinia, Robera4 Oilseeds and Sector Profiles of Major Firms50 Belayneh Kindie Import Export, Guna Trading House,Kabew Trading, Bajiba, Al-Impex5 Sector Profiles of Major Firms63AQ Roses, Red Fox PLC, Golden Rose Agro Farms Limited6 Food Sector Profiles of Major Firms74 NAS Foods, Dire Dawa Food Complex,Health Care Food Manufacturers,Brothers Flour and Biscuit Factory,SEKA Business Group, Organic Export Abattoir,Luna Export Slaughter House, Sebeta Agro Industry,Modjo Modern Export Abattoir PLC ETHIOPIA 2010/11/15 14.

2 33 page vi #6 viCONTENTS7 Sector Profiles of Major Firms93 Finchaa Sugar Factory, Metehara Sugar Factory8 Sector Profiles of Major Firms103 Anbessa Shoe, Ramsey Shoe Factory, Hafde Tannery, ETHIOPIA Tannery Share Company9 Textiles and Sector Profiles of Major Firms115 Crown Textile Weaving, GG Super Garment Factory,Woinu Curtain Trade10 Sector Profiles of Major Firms125 Amibara Agricultural Development,Blen Tsegaye Business Industrial Group11 Sector Profiles of Major Firms136 Sunshine Construction, SUR Construction12 Sector Profiles of Major Firms143 Mugher Cement ENTERPRISE , Messebo Building Materials,Jema Cement13 Steel, Engineering and Sector Profiles of Major Firms155 Zuquala Steel Rolling Mill ENTERPRISE , Yesu PLC,Abyssinia Integrated Steel, Mesfin Industrial Engineering,Holland Car, Glorious14 Sector Profiles of Major Firms169 Addis Pharmaceuticals Factory,Ethiopian Pharmaceuticals Manufacturing ETHIOPIA 2010/11/15 14:33 page vii #7 CONTENTSvii15 Plastic and Sector Profiles of Major Firms175 ETHIOPIA Plastic Share Company16 ETHIOPIA Hansom International Glass PLC177 Annexes179 ETHIOPIA 2010/11/15 14:33 page viii #8 ETHIOPIA 2010/11/15 14:33 page ix #9 ABOUT THE AUTHORSJohn Suttonis the Sir John Hicks Professor of Economics at the LondonSchool of Kellowis the managing director of First Consult PLC, Addis International Growth Centre( ) promotes sustainablegrowth in developing countries by providing demand-led policy advicebased on frontier research.

3 The IGC is directed and organized from hubsat the London School of Economics and the University of Oxford andcomprises country offices across the developing world. The IGC wasinitiated and is funded by the Department for International Development(DFID).John Sutton s ENTERPRISE Map Project aims to provide a standardizeddescriptive account of the industrial capabilities of selected countries insub-Saharan Africa. This is the first volume to original version of this study was delivered to the Office of the PrimeMinister of ETHIOPIA in July 2010. The present version has been edited toremove commercially sensitive material. ETHIOPIA 2010/11/15 14:33 pagex #10 ETHIOPIA 2010/11/15 14:33 page xi #11 ACKNOWLEDGEMENTSThe authors of this report would like to thank the many organizationsand individuals that supported this work, who cannot be work was, in large part, made possible by the firms representatives,who devoted their time to meetings with the research authors would like to thank Ato Newai Gebre-ab, EconomicAdviser to the Prime Minister, and Tadesse Haile, Minister of State forTrade and Industry, for their also thank the following government offices and sectoral associa-tions for providing the necessary information and data.

4 The Ministry ofTrade and Industry (MoTI), the Ethiopian Development Research Institute(EDRI), the Ministry of Agriculture and Rural Development (MoARD),the Ministry of Works and Urban Development (MoWUD), the Ministryof Culture and Tourism, the Ethiopian Sugar Development Agency, theEthiopian Basic Metals and Engineering Industries Development Agency,theEthiopianLeatherIndustriesAsso ciation,theEthiopianFlourandFlourProduct s Association, the Ethiopian Horticulture Producers and ExportersAssociation, the Ethiopian Association of Basic Metals and EngineeringIndustries (EABMEI), the Ethiopian Pulses, Oilseeds & Spices Processorsand Exporters Association, the Construction Contractors Association ofEthiopia and the Ethiopian office of the World , the consulting team at First Consult played a key role in workingwith the 50 companies we profiled. Particular appreciation goes to MichaelAddisu and Hayat Yusuf.

5 ETHIOPIA 2010/11/15 14:33 page xii #12 ETHIOPIA 2010/11/15 14:33 page xiii #13 ACRONYMS AND ABBREVIATIONSAPFA ddis Pharmaceutical FactoryAPIA ctive Pharmaceutical IngredientsBCBuilding ContractorBPRB usiness Process Re-engineeringCADC hina Africa DevelopmentCCCommercial CaneCEOC hief Executive OfficerCRBCC hina Road and Bridge ConstructionCRT TVCathode Ray Tube TelevisionCSAC entral Statistical AuthorityDACADrug Administration and Control AuthorityDBED evelopment Bank of EthiopiaEABMEIE thiopian Association of Basic Metals andEngineering IndustriesEAPEast African PharmaceuticalsEBAE verything-But-ArmsECXE thiopian Commodity ExchangeEEPCOE thiopian Electric and Power CorporationEFFORTE ndowment Fund for the Rehabilitation of TigrayEHGCE mpty Hard Gelatin CapsulesELICOE thiopia Leather Industry CorporationEMSE nvironmental Management SystemEPHARME thiopian Pharmaceuticals ManufacturingERAE thiopian Roads AuthorityESDAE thiopian Sugar Development AgencyETBE

6 Thiopian BirrEUEuropean UnionFAOFood and Agriculture OrganizationFDIF oreign Direct InvestmentFYFiscal YearFOBF reight On BoardGISG alvanized Iron SheetGCGeneral ContractorsGDPG ross Domestic ProductGMGeneral Manager ETHIOPIA 2010/11/15 14:33 page xiv #14 xivACRONYMS AND ABBREVIATIONSGMPGood Manufacturing PracticeGTZG erman Technical CooperationGTZ ISGerman Technical Cooperation International ServicesHACCPH azard Analysis and Critical Control PointHDPEHigh Density PolyethyleneHQHeadquartersHSKH orizontal Shaft KilnHVAH andles Vereening AmsterdamICTI nformation and Communications TechnologyIPOI nitial Public OfferingISCI nitial Seed CaneISOI nternational Organization for StandardizationITInformation TechnologyJACJ ianghuai Automobile CompanyKLMK oninklijke Luchtvaart Maatschappij (Royal Dutch Airlines)KOSPIK ombolcha Steel Products IndustryLDPELow Density PolyethyleneMBIM odern Building IndustriesMIDROCM ohammed International Development Research andOrganization CompaniesMISM anagement Information SystemMLMeter LinearMoARDM inistry of Agriculture and Rural DevelopmentMoFEDM inistry of Finance and Economic DevelopmentMoTIMinistry of Trade and IndustryMoWUDM inistry of Works and Urban DevelopmentMTMetric TonneNGONon-Governmental OrganizationNTON ational Tourism OrganizationOPCO rdinary Portland CementPASDEPPlan for Accelerated and SustainedDevelopment to End PovertyPFSAP harmaceutical Fund Supply AgencyPIC/SPharmaceutical Inspection Cooperation SchemePLCP rivate Limited CompanyPPCP ortland Pozolana CementPPESAP rivatization and Public Enterprises Supervising AgencyQMSQ uality Management System ETHIOPIA 2010/11/15 14.

7 33 page xv #15 ACRONYMS AND ABBREVIATIONSxvRCRoad ContractorROAR eturn On AssetsSABSS outh African Bureau of StandardsSCSeed CompanySCAAS pecialty Coffee Association of AmericaSKDSemi-Knocked DownSMES mall and Medium EnterpriseSNNPRS outhern Nations, Nationalities and People s RegionSOES tate-Owned Enterprisetcptonnes of clinker per yearTNAT rans Nation AirwaysTTCIT ravel and Tourism Competitiveness IndexTVETT echnical and Vocational Education and TrainingUAEU nited Arab EmiratesUKUnited KingdomUNDPU nited Nations Development ProgrammeUNESCOU nited Nations Educational, Scientific andCultural OrganizationUNICEFU nited Nations Children s FundUNIDOU nited Nations Industrial Development OrganizationUSAU nited States of AmericaUSAIDU nited States Agency for International DevelopmentUSDU nited States DollarVSKV ertical Shaft KilnWFPW orld Food Programme ETHIOPIA 2010/11/15 14:33 page xvi #16 ETHIOPIA 2010/11/15 14:33 page xvii #17 AN ENTERPRISE MAP OF ETHIOPIA ETHIOPIA 2010/11/15 14:33 page xviii #18 ETHIOPIA 2010/11/15 14:33 page1 #19 Chapter 1 INTRODUCTIONThis study describes the history and current capabilities of ETHIOPIA s lead-ing industrial companies (agribusiness, manufacturing and construction).

8 The focus is on large and mid-size firms. To motivate this focus, it will behelpful to look at the profile of ETHIOPIA s Figure shows, 78% of exports come from a handful of primarysector industries: coffee, oilseeds, khat (chat), etc. Of the remaining 22% ofexports, three-quarters comes from four industries: cut flowers, leather,meat and meat products, and clothing and textiles. In each of theseindustries, a handful of large and mid-size firms dominate: some 31 firmsaccount for about half of total same picture is true in respect of domestic production and sales,though this is harder to quantify, for want of appropriate statistics. About50 or so large and mid-size firms play a dominant role in the economy;to understand the capabilities currently in place in Ethiopian industry,it is crucial to understand this small number of leading players. In whatfollows, for each of the main industries, we profile most of the leadingfirms (a total of 50 in all), and then provide shorter profiles of a typicalsubset of the industry s middle rank firms.

9 The median employment levelof the 50 leading firms we profile is about 500, while all but two of the othershave over 100 employees. By way of comparison, ETHIOPIA has, in total, 43firms with over 500 employees in the sectors covered here, and 408 withemployment between 50 and 500. Our set of 50 profiled firms is selectedto represent the largest firms in their respective markets or motivation for this focus is simple: if we want to expand capabilities,it is appropriate to ask, where did the existing capabilities of these leadingfirms come from?1 Eight firms account for over 40% of coffee exports. Nine firms account for over half ofoilseed exports. Exports of khat are dominated by one firm, which has 32% of each industry, we identify the main sub-markets. For example, in coffee we distinguishspecialty exporters, bulk exporters and domestic suppliers. Our set of profiled firms is chosento be representative of the leading firms in each of these segments.

10 One industry, cut flowers, ,wechoosethreeofthelargerfirmstorepresen tthe group. ETHIOPIA 2010/11/15 14:33 page2 #20 2 CHAPTER 1 OthersMajor Primary IndustriesCoffee 26% Oilseeds 24% Live animals 4% Chat 10% Pulses 6% Gold 7% 23% Cut Flowers39% SherAQ RosesRed FoxZiway RosesLinssen Roses EthiopiaOthersLeather22% Meat andMeatProducts9% ETHIOPIA TanneriesDire IndustriesKolba TanneryModjo TanneryOthersOthersLunaExportSlaughterHo useModjoModernExportKeraOthers 26% Ayka Addis Textile and Investment Group Textiles 4% Woinu CurtainTrades Others Leading exporters (fiscal year July 2009 June 2010).Source:EthiopianMinistry of Trade and Ethiopian Revenue and Customs Origin of CapabilitiesThe first theme to emerge from the firm and industry profiles that followrelates to the origin of capabilities. There is a view that we should look to the ETHIOPIA 2010/11/15 14:33 page3 #21 INTRODUCTION3 Localtraders(24)Publicsector(11)Foreigno rigin(9)Localmanagers (2)Small local firm (2)Other (2) Origins of ETHIOPIA s leading companies.